Executive Summary: Key Legal and Evidentiary Issues

• Voluminous and frequently irrelevant affidavit evidence from both parties complicated the injunction proceedings.

• Pet Planet initiated but ultimately abandoned the action, leaving unresolved cost consequences for both sides.

• Defendant Companies succeeded in resisting the injunction and sought substantial cost recovery, which was only partially granted.

• Central legal issue involved the enforcement of a non-competition clause in franchise agreements.

• Discovery disputes, including refusals of undertakings, added procedural complexity and led to additional cost applications.

• Court awarded a lump-sum cost to avoid further proceedings and to fairly compensate the defendants without full indemnity.

Facts and procedural background

Pet Planet Franchise Corp. and Petslink Distribution Ltd. commenced legal proceedings against two former franchisees—1676000 Alberta Ltd. and 2007513 Alberta Ltd., both operated by Troy Wolfe—alleging breach of franchise agreements. Specifically, Pet Planet sought an injunction to restrain the defendants from operating competing pet supply stores. Mr. Wolfe, though named as a defendant and plaintiff by counterclaim, did not seek costs.

The initial injunction hearing scheduled for February 2023 was adjourned after the defendants filed eight affidavits in opposition. Later, in March 2023, the defendants questioned Pet Planet’s affiant, Laura English, prompting objections to 47 questions and refusals to provide 41 undertakings. A hearing to compel answers was scheduled but adjourned due to voluminous filings. The application was eventually heard in September 2023, following the filing of a new 3,365-page affidavit by the defendants the day before the hearing.

In November 2023, Justice Neufeld held that most of the questions and undertakings were irrelevant to the injunction application. Only 11 of 88 requests, some by consent, were ordered answered. Thereafter, Pet Planet took no further steps and sold its business in June 2024. The defendants also ceased business operations around the same time. No further litigation ensued.

Discussion of policy terms and contractual clauses

The core legal issue in the underlying application was the enforceability of a non-competition covenant contained in the franchise agreements. However, the case never advanced to a full hearing on the merits. Although the enforceability and scope of the covenant were central to the injunction claim, the case was discontinued before the Court addressed the substance of those provisions. The complexity of the case was significantly increased by the extensive and often tangential materials filed by both parties, especially the defendants.

Judicial decision on costs

The ruling solely addressed the defendants’ application for costs following the abandonment of the injunction by Pet Planet. The defendants incurred legal fees and disbursements totaling $277,122 and sought recovery of 40–50% of this amount, citing factors under Rule 10.33 of the Alberta Rules of Court and relevant case law such as McAllister v Calgary (City), 2021 ABCA 25.

Pet Planet argued that the 50% discount under item 7(3) of Schedule C applied, asserting the injunction application was bona fide and not frivolous. They also contended that the defendants inflated costs through excessive and irrelevant filings and that the matter, while serious at one time, ceased to be important once both parties stopped operations.

Justice Neufeld found that both parties considered the case significant and were willing to incur substantial legal fees. While the defendants had succeeded in defending against the injunction, they had also taken unnecessary steps—such as broadening the scope of issues and filing voluminous materials—which increased complexity and costs. Pet Planet, for its part, contributed to procedural inefficiencies by missing deadlines and failing to appear at hearings.

In light of these factors, the Court exercised discretion under Rule 10.31(1)(b)(ii) to award lump-sum costs of $75,000, representing slightly over 25% of the defendants’ actual legal expenses. This amount was deemed reasonable and proportionate, reflecting two times Column 2 of Schedule C while avoiding the need for further cost assessments.

Outcome

Justice Neufeld concluded that the defendants had successfully defended the action and were entitled to a partial costs award. The lump-sum of $75,000 was ordered payable within 30 days. The decision emphasizes judicial discretion in cost awards and discourages procedural overreach by both plaintiffs and defendants in commercial injunction disputes.